It just occurred to me that when gas prices go down people buy cars

[Maraya1969]

I wonder how much influence the car companies have in the recent downsizing of the price of oil. If anything it is interesting that the price of gas is going down right at the the time the big car companies are asking for a bailout. If the price stays low they will be able to pay the money back because they would sell cars. If the price stayed high they would not be able to pay the money back because they would not be able to sell cars.

Hence it is to their benefit to keep the price of oil low.

Just a thought.

[Richard D]

1. Bing bing bing bing bingo!

Same thought occurred to me.

[mirrera]

2. My Hubby thinks it is so they can move the last SUVs... n/t

[Lex]

4. . . . to the very stupid.

nt

[Donnachaidh]

6. he's probably right

There is a CRAPLOAD of auto dealerships in our area that have literally ACRES of unsold SUV's and BIG trucks that aren't selling.

[lib2DaBone]

18. Agree.. they will keep gas low until the last SUVs & trucks are sold

[Lex]

3. The oil companies should be bailing out the auto companies anyway.

And, if the oil prices stay low, maybe they are, in a way.

[Uben]

5. Hold that thought........

...when the price of gas is low, people have more expendable income, and can afford to buy more of everything, not just cars. It is to the benefit of all for energy prices to stay low. Therefore, it is of utmost importance that we seek out alternative energy solutions and discard the oil vultures once and for all! We can't keep sending our money to the middle east. If we can't keep it here, then we have no formula for success at all. Change or die. There is no other choice.

[global1]

17. So Are You Saying That When Gas Was $4.00/gal That The Oil Companies Are......

the blame for our current economic crisis?

[Uben]

19. Oil companies? No.

Speculators made oil rise. Now that that is no longer profitable, oil has returned to reasonable prices.

It is a matter of economics. When oil is high, everything will follow suit. When we are sending hundreds of billions of dollars overseas for energy, we are not spending it on goods made here, thus we are losing jobs that employ people and feed families and buy the staples we live on.

Our current economic crisis is a result of a lack of oversight on the credit and banking industry coupled with the over-indulgence of Americans, spending more money than they had. The irresponsible people who took those irresponsible loans are just as culpable as the banks. I worked in the credit industry back in the seventies, a time when you had to prove you were capable of paying back a loan. They did not pass out credit cards to everyone who wanted one. No job, no credit. period.

And, I don't want to place all the blame on ignorant homeowners. The banking industry did more harm to itself by formulating these credit default swaps, which were just a pyramid scheme for banking officials to steal more money. The question we should be asking is "Who the fuck is going to jail?", and why are these officials allowed to remain in the industry?

[Titus Andronicus]

7. How many people are in charge of the oil prices?

[JuniperLea]

8. That doesn't help people who have no jobs or money...

Gas prices are one small note in the equation... who is going to lend the money to buy the cars? How many people who would have planned on buying a car soon can do that now?

We are in uncharted waters. I don't think we can rely on what has happened in the past... it's a whole new ballgame now.

[iamthebandfanman]

9. to me, they are one and the same

the auto industry and the oil industry that is

[wishlist]

10. Saudis have a large stake in some car companies

I have long thought that the large Saudi investment in automobile manufacturing was probably a factor in the strong opposition to increasing mileage standards. A few years ago I read that one of the car companies (perhaps Daimler Chrysler at the time) had almost 50% ownership by Saudis.

[Mass]

11. Except people do not have money and there is no credit available,

In standard times, you could be correct. Right now, gas price is not what is stopping people to buy cars. credit shrinkage and job losses are.

[sufrommich]

12. The price of gas has gone up tremendously in the

last 8 years,with the exception of this year,where was their influence then? Somehow ,I doubt that OPEC sets prices at the behest of the American big three.It matters little to them which country buys it's oil as long as they buy it at ever increasing volumes for the highest price.

[hobbit709]

13. Not if you ain't got money.

We can't afford a new car or even a late model used one so it don't matter how cheap gas gets.

[DemoTex]

21. Not if you ain't got a job.

Not if you think your job is in jeopardy.

[notadmblnd]

14. people with jobs, who can pay their bills, buy cars

I used to buy a new car every two years. The one I have now is 6 years old. Why? Because I haven't worked in 4 years and can't afford a car note. I've replaced nothing on my car except the battery, breaks, tires, windshield wipers and of course, my oil changes. Not too bad for driving one of those inefficient GMC vehicles that over priced workers are paid outrageous sums of money to produce, is it?

I've spent the last four days competing for a position. If I'm offered a position on Monday, I'll not only be driving a new one, I'll be selling them too.

[Fed_Up_Grammy]

24. I always have bought new cars ,but kept them for about

8-10 years. Why on earth would anyone need a new car every two years?

[notadmblnd]

29. People buy new cars for two reasons. Need or Want.

I wanted them. And, at the time I could afford them. Now try telling me, you only EVER fulfill your needs and never your wants; then I'll know you're a liar.

[Fed_Up_Grammy]

30. A tad defensive aren't you? Wow !

[notadmblnd]

31. yeah, especially when sanctimonious people attempt to imply

that they're better than another because they need or want less.

[msongs]

15. oil companies generate profits, US car companies generate losses - not a good match nt

[FarCenter]

16. Change isn't necessarily reversible

Step 1 - Credit is cheap, far-flung bedroom communities are built, especially in CA, AZ, FL, and sold to people with dodgy credit. The mortgages are securitized and passed on to investors around the world. Big gas-guzzling SUVs are sold to same people, and auto companies pass on securitized leases and auto loans to same investors.

Step 2 - Gas goes to $5 / gallon. People with dodgy credit can't afford to drive from far-flung McMansion development to anywhere that there is a job. Builders can no longer sell houses. Value of McMansions drops. People with dodgy credit walk away from underwater mortgages.

Step 3 - Low-rated tranches of securitized mortgage debt become worthless, creditors turn to banks and insurance companies that wrote credit default swaps on the mortgage bonds, banks and insurance companies capital drops sharply as they make payouts, banks stop lending through mortgage wholesalers to people with dodgy credit in order to restore leverage ratios.

Step 4 - Big SUVs come off lease and are worth less than the expected residual, and investors in auto loan paper lose big time. Meanwhile, construction folds up, jobs are lost, and fewer people have credit scores that enable them to get an auto loan.

Step 5 - Banks continue to conserve cash, credit crises bleed into auction rate securities, commercial paper, etc, and captive auto loan specialist like GMAC or Ford Credit are no longer able to sell auto loans through to banks and investors.

Step 6 - Without easy auto loan credit, car sales follow SUV sales into sharp decline.

Step 7 - Consumers cut driving, gasoline sales decline, crude oil prices fall, gas prices fall.

However, this has no effect, since the damage to the auto loan market were done by the high gas prices in step 2 above, and is now irreversible.

Auto sales will rise when consumers save enough to provide a higher down payment and/or have generally better credit scores.

I doubt that we'll see sales much over 10,000,000 units / year for the next three years.

The US fleet is about 250,000,000 vehicles and the scrappage rate is about 5.6% per year. That would be 14,000,000 a year. But in the short term, the fleet will shrink somewhat (there are more vehicles than licensed drivers), and the average age of the fleet can increase for a while (since actually, the later model vehicles are of better quality).

[leftofthedial]

20. IF people have jobs they don't fear will go away in the next few months

I did a quickie unscientific poll of twenty or so people--friends, family. Nine of them need a new car and would love to buy one. None of them could afford to buy a car if new cars cost more than $5000.

Gas could be free and new cars could cost 15% of what they really do and people still would not buy cars. We have no jobs. We have no money. The "free market" repuke and corporate "democrats" have bled us dry.

[Occam Bandage]

22. That's just dumb. I'm sorry, but it's dumb.

DU seems to believe that there's some sort of dial somewhere that controls the price of commodities, and any CEO of any company in any industry can just twist that dial however he likes.

[northernlights]

23. wrong.

When people feel wealthy they buy new cars.
When people feel wealthy and gas prices are low, they buy gas guzzlers.

With the collapse of housing, the stock market down 40% and unemployment skyrocketing, people do NOT feel wealthy. They feel scared shitless. Those who still have jobs will save where they can. Including squeezing another year out of the older car. And less discretionary driving.

Car companies do not directly control the price of gas. Oil prices dropped because speculators in the stock market saw their free ride was over and dumped oil stocks, even before the stock market tanked. The coming recession that we've been in for a year has only just started to reduce demand for oil. As more plants close, malls shut their doors and foreclosed houses sit empty, the demand for oil will continue to drop. A year from now, $50/barrel could seem high by comparison. Or not, depending on what the gov is able to pull off.

[Aviation Pro]

25. Not me. I'm perfectly happy with my used 2003...

...Saturn Ion that gets 40 MPG on the highway and is paid off.

[PassingFair]

26. The obvious hole in your theory, is, of course, that people are NOT buying cars.

Even Honda's sales are down 32%.

http://www.nytimes.com/2008/12/06/sports/othersports/06grandprix.html?ref=automobiles

People won't buy cars because they are either out of work,
or fear that they will not have a job in the very near future.

[rainbow4321]

28. And at least here in the DFW area, they are not going back to driving their cars

This goes hand in hand with the recent article about how DART bus/lightrail ridership is still peaking in our area despite gas prices dropping. People (including me) turned to Dallas mass trans system when gas prices were flirting with 4 bucks/gallon...and apparently they liked the change so much that even local gas prices at $1.50 is NOT enough to make them go back to driving again. The damn tollways suck, anyway, so I have no sympathy for them.


http://www.dallasnews.com/sharedcontent/dws/dn/latestnews/stories/DN-ntta_06met.ART.State.Edition2.4a687b4.html

Slumping summer traffic on NTTA's toll roads was seen as temporary, and officials said earlier this year that they expected road use would rebound once record-high fuel prices came down from $4 per gallon or more. But so far, the traffic has been slow to return – and it may be months or longer before it does, Mr. Copeland suggested.

Even though gas prices have dipped into the $1.50-per-gallon range in parts of North Texas, drivers appear to have cut back on tolls, perhaps seeing them as luxuries in a time of uncertainty. Mr. Copeland said that trend will only accelerate in the new year, as concerns over the price of gas give way in coming months to bigger worries, like whether workers will keep their jobs as the Texas economy worsens.

"Now that we have actual toll receipts from September and October, we can see that traffic has not resumed as quickly as we thought as a result of lower gas prices," Mr. Copeland said. "We also didn't previously believe that North Texas would feel the brunt of the economic slowdown. Since then, we've seen articles and other reports that have convinced us that that's not the case."

[Kalyke]

27. I don't know, but the two best selling cars/trucks in November

were American-made:

[Fire_Medic_Dave]

32. Except most of their inventory is in SUV's and trucks.

Despite the recent drop in gas prices people still aren't willing to buy a gas guzzler.

David